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Unformatted text preview: Would this firm be able to pay interest to its bondholders, and/or dividends to its stockholders? Briefly explain, relating your answers to the difference between accounting costs (and profit) and economic costs (and profit). 2) Consider the diagram depicting a monopolistic competitor firm with a down-sloping demand for its brand. Show the short run profit maximizing level of output and price charged for the firm above. How do we know the above Monopolistically Competitive firm is not in long run equilibrium above? What happens to move this firm toward long run equilibrium? ATC $/Q Q - output MC = AVC D MR ATC $/Q Q – output of brand X MC D MR...
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This note was uploaded on 03/11/2008 for the course EC 201 taught by Professor Brown during the Winter '07 term at Cal Poly Pomona.
- Winter '07